As a rule, if March Madness gets canceled, then the IPO window is closed.
Remarkably, one biotech pulled off an IPO this week, along with a blank check company. Outside of a few more SPACs, the IPO market may essentially shut down for months, as coronavirus fears reshape the 2020 IPO timeline. Before issuance returns to normal, we’ll need to wait for:
Mirroring broader markets, IPOs over the past five years averaged a 23% loss since the sell-off began, though a handful of names have outperformed. Companies in those industries are likely IPO candidates when the market re-opens.
Imara (IMRA), a Phase 2 biotech targeting sickle cell disease, priced an upsized IPO at the low end of the range raising $75 million at a market cap of $286 million. Backed by NEA and OrbiMed, Imara’s sole candidate is an oral, once-a-day therapy entering Phase 2b trials in the coming months. Imara fell 6.3% on its debut - not bad during the market’s worst day since 1987 - and closed back at its issuing price.
Deerfield Management’s second healthcare SPAC, DFP Healthcare Acquisitions (DFPHU) raised $200 million offering shares with quarter-warrants. It finished the week up 0.1%. The SPAC is led by the former CEO of Universal American, Richard Barasch, and Deerfield partner Steven Hochberg. Their previous SPAC acquired medical equipment provider AdaptHealth (AHCO; 47% return from IPO) in July 2019.
| 2 IPOs During the Week of March 9th, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 03/13 |
| Imara (IMRA) | $75M | $286M | -6% | -6% | +0% |
| Phase 2 biotech developing small molecule therapies for rare genetic disorders. | |||||
| DFP Healthcare Acq. (DFPHU) | $200M | $250M | 0% | +2% | +0% |
| Second healthcare-focused blank check company formed by Deerfield Management and Robert Barasch. | |||||
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SPAC activity has been at record levels in 2020, and this trend doesn’t show signs of stopping despite some recently trading below their $10 issue price. Chardan Capital’s second eponymous healthcare SPAC, Chardan Healthcare Acquisition 2 (CHAQ.U), filed to raise $85 million and Brilliant Acquisition (BRLIU) filed to raise $40 million.
| 2 Filings During the Week of March 9th, 2020 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Brilliant Acquisition (BRLIU) | $40M | SPAC | EarlyBird |
| Blank check company targeting an Asia Pacific business. | |||
| Chardan Healthcare Acq 2 (CHAQ.U) | $85M | SPAC | Chardan |
| Second blank check company formed by Chardan Capital targeting the healthcare industry. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 3/12/20, the Renaissance IPO Index was down 22.3% year-to-date, while the S&P 500 was down 23.2%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was down 12.3% year-to-date, while the ACWX was down 27.6%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Adyen.
